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Home > Retirement Answer Man Show > #173 – Investment Risk Management for Regular People
Podcast: Retirement Answer Man Show
Episode:

#173 – Investment Risk Management for Regular People
Category: Business
Duration: 00:37:10
Publish Date: 2017-06-07 01:00:14
Description:   Get ready for part three of our Retirement Investing series. On this week’s episode of the Retirement Answer Man, we’ll talk about risk management, types of risk to watch out for, and why the common approach to managing risk might not be a good fit for you. This one will be a lot more technical than our previous two shows, so get ready to get your geek on! You can’t get something from Nothing As my mother always said, “You can’t get something from nothing.” This rings true especially in the world of investing. You can’t expect to reap the rewards of your investments unless you are willing to give up something. For most that sacrifice comes in the form of risk. All investing has risks and the better you understand those risks and know which are worth taking, the better prepared you will be to invest wisely for your retirement. Stay tuned to get a glimpse of the different risks you might have to face. Diversify your portfolio to fit your goals Investment risk is very real, but if you are wise about how you invest your assets, you can reduce that risk. However, a diversified portfolio that eliminates risk might not help you meet your investment goals. It’s important that you become clear on what you want out of your retirement investments so that you can know how to diversify your assets in order to meet those goals. Join me in this episode of the Retirement Answer Man to hear my tips on how to create a good balance. Mainstream risk management might not be right for you Risk management is a topic we hear a lot about in our modern investing culture. There’s even a common method used to discern how much risk it too much. In this episode of the Retirement Answer Man, I'll discuss why I think the mainstream view of risk management falls short and how you can develop a balanced view that will help you achieve your retirement goals. Don’t listen to the Investment Professionals There is a huge disconnect between investment professionals and the regular person. Most people think of risk as losing money and are more concerned about what their investments can do for them to create their ideal retirement than they are about optimizing their portfolio. The professionals on the other hand look at risk management based on statistical factors in order to create an optimized portfolio. Often times an optimized portfolio has nothing to do with the life goals you and your family may have. In this episode, I dive into the thinking behind the professionals so we can figure out if the standard approach is right for you.   OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN [0:30] You can’t get something for nothing. [0:45] In order to reap the benefits of potential investments, you have to be willing to give something up. HOT TOPIC SEGMENT [2:24] Markets are at an all time high and risk is being more sensationalized than ever before. [3:00] Mainstream Risk management. [4:00] Types of risk that are not talked about very often. [5:00] The Risk of Longevity. [6:00] The risk of Inflation. [6:45] Managing the boogie-man of risk. WHAT’S THAT MEAN SEGMENT [6:55] What is an index? [8:27} What is standard deviation? [12:08] What is a correlation? PRACTICAL PLANNING SEGMENT [14:00] “Between calculated risk and reckless decision making lies the dividing line between profit and loss.” [14:50] There is a huge disconnect between investment professionals and regular people. [16:55] 2 Major types of risk that we are affected by. [17:00] Risks can be reduced by the diversification of assets. [19:00] Systematic and Market risk. There is no way to eliminate these risks. [26:50] How do I know what my risk tolerance is? [27:00] The disconnect.   TODAY’S SMART SPRINT SEGMENT [33:30] Figure out what the asset allocation is in your portfolio, and why. THE HAPPY LAB SEGMENT [34:28] I’m happy that we got through this discussion of risk. If you are having a hard time explaining someth...
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